Q. Diffrence between present values of future cash ?
The difference among the present values of future cash inflows generated by an asset and its cost is known as net present value.
The NPV is able to be computed with the help of the following formula:
A1 A2 An
W = ------ + ------ + ------- + ------- - C
(1+K)1 (1+K)2 (1+K)n
W = Net Present Worth
A1, A2,--An = Stream of Cash Flows
K = Appropriate discount rate to calculate risk and time factors
C = Initial outlay to obtain an asset or pursue a course of action.